DOGE or the Department of Government Efficiency, has been running through the various federal bureaucracies looking for fat to cut and employees to eliminate. While there has been much hand-wringing from opposition Democrats and individuals impacted, the majority of the US is supporting the move to cut costs and eliminate programs that do not align with US interests. While government spending increases and the budget deficit grows, there is a rising awareness that expenditure reductions are needed. This is not dissimilar to what frequently happens in the private sector.
According to a report by Bloomberg, the Securities and Exchange Commission (SEC) may be next for job cuts and possible consolidations.
The SEC is the main regulator for securities firms, including capital markets of around $110 trillion, and holds a mission of maintaining fair markets, investor protection, and enabling capital formation. The SEC has oversight of over 40,000 entities.
Also included in its remit are the Public Company Accounting Oversight Board (PCAOB), the Financial Industry Regulatory Authority (FINRA), the Municipal Securities Rulemaking Board (MSRB), the Securities Investor Protection Corporation (SIPC), and the Financial Accounting Standards Board (FASB).
It is arguable that during the Biden administration, the SEC fell short in regard to supporting capital formation while it clearly undermined the digital asset sector which is now poised to grow as the government transition takes place.
The SEC Budget for 2025, submitted to Congress, includes$2.594 billion for “5,621 positions and 5,073 full-time equivalents.”
The largest section of the SEC is the Division of Enforcement which hoovers up around $800 million from its budget.
A 2024 Inspector General Report outlined recommendations for the SEC while stating:
“the current budget environment constrains the SEC’s ability to address each of the challenges described in this report Flat funding for Fiscal Year (FY) 2024 required an Agency-wide freeze on hiring, as well as the elimination of certain performance bonuses and other employee benefits.”
“Increasing personnel costs limit the resources available to update and improve legacy information systems, including information security The changing regulatory environment will likely increase operational demands on the Agency and its staff Lack of resources may hinder the Agency’s ability to meet these challenges, mitigate its risks, and pursue its vital mission.”
The “substantial” rulemaking during the Gensler Commission and the 55 proposed rules, taxed the resources of the SEC. The broadly condemned Climate Disclosure rule is a handy example of SEC disorientation. It is unclear how the reconvened Commission will move forward on rule-making with the exception that a Crypto Task Force has been launched to address the years of negligence by the regulator.
While the Consumer Financial Protection Bureau (CFPB) has been a target for reduction and perhaps closure, as the agency is a relatively new entity and many of its responsibilities can be shifted over to another department, the SEC is vitally needed – especially if it adheres to its mission. Some, including former SEC attorney Nick Morgan have outlined needed changes at the regulator. Others have highlighted the possibility of combining regional offices.
While it is not clear as to what fat may be cut at the SEC, DOGE has typically moved quickly to highlight areas that may be streamlined, which are then presented to the President for a decision.